When Covid-19 shut down economies around the world last spring, it also stopped all those trips business executives make to customers, suppliers, conventions, trade shows, and their company offices. Almost overnight, millions of people globally began working from home and using video-conferencing technology to transport themselves to meetings and negotiate deals.
Eight months later, the situation hasn’t changed dramatically when it comes to business travel. And, there’s mounting evidence that the category — the most profitable for airlines and other hospitality companies — may never fully reconstitute itself. At the very least, we anticipate business travel to remain depressed through 2023.
The biggest disruption is expected in the internal travel category that makes up 40% of business travel. This includes trips between offices within a company or to conventions and trade shows. We expect a long-term contraction of as much as 10% in business travel overall as employers and employees become increasingly comfortable with doing business over video-conferencing apps. Another factor holding down business travel is the reluctance to fly internationally and recent lockdowns in major cities in Europe.
Survey findings
In Oliver Wyman’s second Traveler Sentiment Survey, 43% of the more than 2,500 business travelers questioned said they expected to travel less for business even after Covid-19 subsides. That response was 16 percentage points higher than the 27% who told the survey in May they expected to travel less — a clearly troubling increase from the point of view of anyone who depends on that revenue.
Respondents cited two reasons for the anticipated change in behavior: 34% had safety and health concerns, and 31% said teleconferencing and remote working arrangements were as effective as being in the office and traveling. While health anxieties over travel would presumably dissipate with the development and dissemination of a vaccine, the respondents’ desire to work from home and use video conferencing suggest that a downturn in business travel may persist long after Covid is conquered.
